Dreams derailed for pvt container train aspirants

MUMBAI: it's almost like a swanky train that has run out of steam even before its dream run. Almost 16 months after the Indian Railways (IR) decided to privatise container transportation, ending the monopoly of state-owned Container Corporation of India (Concor), a majority of private players have yet to roll out their services.


As many as 11 companies, out of the 14 that bought the expensive licences, now blame their travails on “inequitable” policies and inadequate infrastructure. This is, however, hotly contested by incumbent Concor, which continues to enjoy pole position.

What attracted private players to the fledgling sector is the sheer volume of export/import containers. The current volume of 4 million 20-ft container units (TEUs) is expected to jump to 20 million TEUs by 2014. But, “high user charge” by Concor, “poor supply of rakes” and “lack of infrastructure” like freight stations — container freight stations (CFSs) and inland container depots (ICDs) — where cargo consolidation and deconsolidation take place, have upset the private sector’s applecart.

Concor, claim private operators, charges heavily for using its terminals. Today, 40% of a private operator’s revenues for transporting cargo goes to Concor as terminal charges. Worse for private players, the state-run Central Warehousing Corporation’s rail-linked ICD at Loni is the only such facility currently available to them till they set up their own facilities. On the other side, Concor exclusively operates a string of ICDs across the country.

“This has a direct impact on efficiency,” says Ramesh Chandra Dubey, president, Association of Container Train Operators, and managing director, Pipavav Railway Corporation. Despite a Rs 10-crore licence to operate Delhi-Pipavav trains, his company is yet to start operations.

Rakesh Mehrotra, managing director, Concor, refutes these allegations. “The policy of Concor to permit other operators to use our ICDs is based on commercial considerations and our policy has to ensure that the commercial and business interests of Concor are fully protected. We are not here to protect the interests of our competitors who want to operate their trains from our terminals by taking away our business and this can in no way be termed as monopolistic,” says Mr Mehrotra.

He adds Concor is certainly not a regulator. “We are one of the 15 operators who have the necessary approvals for running container trains. We carry out our business based on our own commercial and pricing policies. Other operators also have the same freedom as Concor has to determine their own policies independently,” says Mr Mehrotra.

Private operators are, however, a distressed lot. The haulage charges to be paid by private operators to IR in case of lightweight cargo are much higher than what cargo owners pay trucking companies. “Compared to the road sector, haulage charges are almost Rs 7,500 higher,” adds Mr Dubey.

Private players are also worried about the absence of any service-level guarantees in the model concession agreement (MCA) with IR. For example, Concor’s container service between Delhi and Chennai requires a transit time of five days, while passenger trains cover the same distance in just 36 hours. “We have requested IR to look into the matter,” says Mr Dubey.

Besides, rail lines in India are running at a super-saturation level of 115%. The routes that connect the four metros have even higher levels of 150%. “Around 65% of India’s total freight traffic is managed by 15% of the rail network,” says an IR official. Entry of 14 more players will only lead to more congestion, say market sources.

Shortage of rolling stock is another constraint. Both Concor and IR have placed large orders with IR-owned workshops and private manufacturer Texmaco expecting higher traffic. While wagon manufacturers do not acknowledge capacity constraints, industry sources predict a 12-15 months time lag for deliveries. Key bottlenecks are shortage of wheels and axle. “Wheels have to be imported and the wagons are in short supply,” adds Mr Dubey.

“This business is heading for a bloodbath and the only entity going to profit from it is the railways. It has already made around Rs 550 crore by the way of licences,” says a logistics service provider, who had earlier applied for a licence, but later backed out.

Three companies which have managed to start services are Gateway Distriparks , Hind Terminals and India Infrastructure Logistics — a joint venture between Singapore-based NOL and Hindustan Infrastructure Projects & Engineering, floated by former promoter of BPL, Rajeev Chandrasekhar.

The department of industrial policy and promotion says rail transport is among the eight sectors reserved for the public sector and giving licences to private players requires an amendment. The amendment is yet to come by. “It would have made more sense to open up container business only when the dedicated freight corridor and the fourth container terminal at JNPT became operational. These are not expected before 2012,” said sources.